Business Environment

A business is a legal organizational entity to sell good and/or services to consumers usually to generate profit. A manager is a skilled individual in knowing how to analyze and improve the ability of an organization to survive and grow in a complex and changing world. Managers have a set of tools that assists them to comprehend the complexity of the environment of organization.

A managements system describes the organization and the set of interacting institutions and forces in the complex and quickly changing environment of the organization that affect its ability for serving its customers. The company or firm must observe and adapt to the environment if it is to survive and prosper. The successful firm will identify, appraise, and respond to the various opportunities and threats in its environment.

On the two levels, the management system can be conceptualized. The first level involves the internal environment of the organization. An organization can be viewed as a resource conversion machine that takes the inputs like money, labor, materials, and equipment from the outside world or external environment, and converts them into the useful products, goods, and services, and makes them available to the customers as outputs.

Management system’s second level involves the external environment of the organization. It consists of the outside institutions and forces that have an actual or potential interest or impact on the ability to achieve its objectives – competitive, economic, technological, political, legal, demographic, cultural, and ecosystem.

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